Discover Whether It's Legal To Use Cryptocurrency In India

Is it Legal to Use Crypto in India?

Cryptocurrency is taking the world by storm, and India is no exception. A cryptocurrency currency and Regulation of Official Digital Currency Bill was recently introduced in the Lok Sabha, the lower house of parliament in India. It sought to create a favorable framework for creating a digital currency for issuing by the Reserve Bank of India.

Discussing this bill had been scheduled for 2021, but it never happened. The bill seeks to highlight the finance ministry's responsibility in the regulation of virtual assets.

According to the Indian Ministry of Finance, crypto assets are borderless, and preventing regulatory arbitrage needs international collaboration. The Ministry further says that any regulation is only effective after international collaboration following the evaluation of risks and benefits. It also requires common taxonomy and standards.

Is Cryptocurrency Legal In India Or Not?

No central authority regulates the use of cryptocurrency in the country. There are no rules, guidelines, or regulations. The Minister of Finance proposed a tax on digital assets in 2022, leading to increased debate regarding the legality of cryptocurrencies in the country.

Most people see taxation as the first step to recognition. However, the government has not yet passed any official clarification regarding the matter. The country's Union Budget of 2022, presented by the Ministry of Finance, revealed a levy of 30% gains tax on earnings from cryptos. It included 1% deducted at the source.

Section 115BBH in the country's budget for 2022 introduced a tax on cryptocurrency. A 30% tax was levied on profits from cryptocurrency trading starting in April 2022. The flat income tax applies to traders, investors, or anyone transferring digital currency.

What Does the Future Hold for Cryptocurrency in the Country?

The government is paving the way to protect crypto investors with initiatives such as the cryptocurrency bill of 2021. It has led to a surge in the number of people trading digital assets using an Ethereum bot.

Crypto trading platforms are realizing a big leap in volumes. The bill is a big step towards regulating the cryptocurrency market. It aims at creating a favorable environment for creating an official digital currency to be issued by the reserve bank.

Cryptocurrency Regulations in Other Countries

Since its introduction, there have been various debates regarding the use of cryptocurrency. People use it today for international transactions, but without control or regulation by relevant central banks. The biggest worry about the use of cryptocurrency is for financing terror activities and money laundering since its use is anonymous.

Some countries have introduced regulations to manage its use. Let's take a closer look at some of them.

USA

The country has a dual governance system with different cryptocurrency laws in each state. New York launched a licensing framework, BitLicense, in 2016 for crypto and business exchanges. However, some states have yet to express their views about the use of cryptocurrency. Various states have regulations, but the country has had a positive overall response to the crypto trading community in general.

Great Britain

The UK doesn't have any regulations regarding cryptocurrency yet. It's considered property, not legal tender. The Financial Conduct Authority regulates the licensing of authorized businesses related to the crypto industry, including exchanges. It has rules that any company seeking a license must adhere to.

The country collects taxes from cryptocurrency, just like when trading with fiat money. Businesses involved in cryptocurrency must abide by corporate tax laws.

Canada

The country is receptive to cryptocurrency. It's considered an item by the Canadian Revenue Agency for tax collection. People must report any income or gain from crypto transactions.

Canada even pioneered the acceptance of a crypto-traded fund (ETF) with some trading on the Toronto Stock Exchange today. Canadians consider crypto a money service that operates under the guidance of the Proceeds of Crime and Terrorist Financing Act.

Crypto exchanges must be registered by the Financial Transactions and Reports Analysis Centre. A person must abide by compliance regulations and suspicious transactions.

European Union

The majority of countries in the EU have a soft regulatory framework for crypto. In 2020, the EU finalized a legislation plan for regulating virtual assets. This has been endorsed by many companies within the union. Legislation plans are in place to prevent the framework from breaking up. The EU ensures people access and use cryptocurrency securely.

Countries that Don't Accept the Use of Cryptocurrency

Countries, where cryptocurrency is banned, include:

• Iraq
• Tunisia
• China
• Bangladesh
• Morocco
• Qatar
• Egypt
• China

Wrapping up

People in India can trade cryptocurrency, though it's not officially legal in the country. The ministry of finance introduced a 30% income tax on profits from the sector, and there are discussions about additional legislation, so we'll see where it goes next.